A rainy-day fund is not an investment. Its purpose is not to earn — it is to stop an unexpected expense from turning into debt.
It looks like a small matter. It is in fact the foundation the rest of the plan stands on: without one, every investment has to be sold at the first problem, usually at the worst possible moment.
How much
The unit is months, not manat. Take your essential monthly outgoings — the spending you cannot stop — and multiply:
- Stable, salaried income: three months is a good start.
- Uneven income (self-employment, commission, seasonal work): six months.
- Sole earner in the household: the upper end.
The rainy-day fund calculator on this site shows the target and how far short you are.
What counts as essential
Rent, utilities, groceries, transport, medicine, school. Eating out, subscriptions and leisure do not — in a hard month you stop those. The fund finances your minimum life, not your normal one.
Where to keep it
Three conditions: immediately reachable, not liable to change in value unexpectedly, and separate from your day-to-day card.
Being separate matters more than it looks. A fund sitting in your current account is not a fund — it is simply money you have not spent yet.
Currency
If your spending is in manat, it makes sense for the bulk of the fund to be in manat: its job is to make payments, not to gain on an exchange rate. How to split currencies is a subject of its own, and this lesson does not settle it.
A rainy-day fund should be boring. If it is interesting, it has become an investment and has stopped doing its job.
The order
Stop the flow first, then gather a small buffer (one month, say), then clear expensive debt, then bring the fund to its full target. Investing comes after that.